Question 1

​ Figure 5-4   In Figure 5-4, the rightward shift in budget lines from the one containing point A to the one containing point B

Accepted Answer

A) resulted from equal price reductions in beer and wine. 
B) resulted from an increase in the consumer's income. 
C) could have been caused by income or price changes. 
D) All of the responses are correct. 
A) resulted from equal price reductions in beer and wine. 
B) resulted from an increase in the consumer's income. 
C) could have been caused by income or price changes. 
D) All of the responses are correct.

Question 2

Which of the following is characteristic of indifference curves?

Accepted Answer

A) They are negatively sloped. 
B) They never intersect. 
C) They are convex toward the origin. 
D) All of the responses are correct. 
A) They are negatively sloped. 
B) They never intersect. 
C) They are convex toward the origin. 
D) All of the responses are correct.

Question 3

The number of compact discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.

Accepted Answer

A) True 
 B)False

Question 4

How do you calculate consumer's surplus? What happens to consumer's surplus when the price of a commodity rises?

Accepted Answer

Consumer's surplus = Total utility (in m

Question 5

High price and low total utility indicate

Accepted Answer

A) low marginal utility. 
B) large quantities are sold. 
C) high marginal utility. 
D) a high price\marginal utility ratio. 
A) low marginal utility. 
B) large quantities are sold. 
C) high marginal utility. 
D) a high price\marginal utility ratio.

Question 6

If a good has "snob appeal," consumers may purchase less when the price falls.

Accepted Answer

A) True 
 B)False

Question 7

The theory of consumer choice is based on the hypothesis that each consumer wants to

Accepted Answer

A) maximize her total utility. 
B) maximize her marginal utility. 
C) minimize the rate at which her marginal utility diminishes. 
D) minimize the percentage of her consumption diverted to inferior goods. 
A) maximize her total utility. 
B) maximize her marginal utility. 
C) minimize the rate at which her marginal utility diminishes. 
D) minimize the percentage of her consumption diverted to inferior goods.

Question 8

When the price of one good decreases, such as hot dogs, it may also increase the demand for other, related goods, like mustard.

Accepted Answer

A) True 
 B)False

Question 9

The budget line facing a household includes information on

Accepted Answer

A) prices of two goods and household income. 
B) household income and the price of money. 
C) the price of one good and household income. 
D) the price of two goods but no information on household income. 
E) preferences of goods at various prices. 
A) prices of two goods and household income. 
B) household income and the price of money. 
C) the price of one good and household income. 
D) the price of two goods but no information on household income. 
E) preferences of goods at various prices.

Question 10

Figure 5-3
 
In Figure 5-3, a decline in price from 3 to 1 will increase market quantity demanded by

Accepted Answer

A) 30. 
B) 40. 
C) 50. 
D) 60. 
A) 30. 
B) 40. 
C) 50. 
D) 60.

Question 11

Figure 5-8
 
In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points

Accepted Answer

A) A, C. 
B) B, D. 
C) C, B. 
D) A, B. 
A) A, C. 
B) B, D. 
C) C, B. 
D) A, B.

Question 12

What is the marginal rate of substitution, and what role does it play in determining the consumer's optimum choice?

Accepted Answer

The MRS is the slope of the indifference

Question 13

An inferior good is one

Accepted Answer

A) produced by American industries. 
B) whose quantity demanded falls when the purchaser's income rises. 
C) ordinarily bought by college students from college-town merchants. 
D) suitable for a garage sale. 
A) produced by American industries. 
B) whose quantity demanded falls when the purchaser's income rises. 
C) ordinarily bought by college students from college-town merchants. 
D) suitable for a garage sale.

Question 14

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity.

Accepted Answer

A) True 
 B)False

Question 15

The slope of a consumer's indifference curve between two commodities represents

Accepted Answer

A) her marginal rate of substitution between the commodities. 
B) the relative prices of the goods. 
C) her marginal revenue from selling the commodities. 
D) her marginal revenue product from consuming the commodities. 
A) her marginal rate of substitution between the commodities. 
B) the relative prices of the goods. 
C) her marginal revenue from selling the commodities. 
D) her marginal revenue product from consuming the commodities.

Question 16

When the price of a commodity falls, we can expect

Accepted Answer

A) total utility will fall. 
B) marginal utility of the last unit purchased will fall. 
C) marginal utility of the last unit purchased will rise. 
D) purchases will fall because of a change in marginal utility. 
A) total utility will fall. 
B) marginal utility of the last unit purchased will fall. 
C) marginal utility of the last unit purchased will rise. 
D) purchases will fall because of a change in marginal utility.

Question 17

-In Figure 5-1 from the text, if the price of pizzas is $8: 
a.how many pizzas will the consumer purchase? 
B.what is the payment for the optimal number of pizzas? 
C. how much consumer's surplus will the consumer receive?

Accepted Answer

a. 
a.The consumer will purchase 5 pizza

Question 18

The law of diminishing marginal utility explains why

Accepted Answer

A) economists think that utility is a fallacy. 
B) consumers optimize by spending all of their income. 
C) individual demand curves have a negative slope. 
D) marginal utility rises as total utility falls. 
A) economists think that utility is a fallacy. 
B) consumers optimize by spending all of their income. 
C) individual demand curves have a negative slope. 
D) marginal utility rises as total utility falls.

Question 19

The law of diminishing marginal utility states that total utility will decrease at an increasing rate as additional units of a commodity are consumed.

Accepted Answer

A) True 
 B)False

Question 20

-Figure 5-5 shows a consumer budget line for french fries and hamburgers. The price of an order of fries is $2. This implies that the price of a burger is

Accepted Answer

A) $1. 
B) $2. 
C) $4. 
D) $8. 
A) $1. 
B) $2. 
C) $4. 
D) $8.

Exam 5: Consumer Choice: Individual and Market Demand

​ Figure 5-4 In Figure 5-4, the rightward shift in budget lines from the one containing point A to the one containing point B

Which of the following is characteristic of indifference curves?

The number of compact discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.

How do you calculate consumer's surplus? What happens to consumer's surplus when the price of a commodity rises?

High price and low total utility indicate

If a good has "snob appeal," consumers may purchase less when the price falls.

The theory of consumer choice is based on the hypothesis that each consumer wants to

When the price of one good decreases, such as hot dogs, it may also increase the demand for other, related goods, like mustard.

The budget line facing a household includes information on

Figure 5-3 In Figure 5-3, a decline in price from 3 to 1 will increase market quantity demanded by

Figure 5-8 In Figure 5-8, the consumer is indifferent between the combinations of beer and wine coolers indicated by points

What is the marginal rate of substitution, and what role does it play in determining the consumer's optimum choice?

An inferior good is one

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity.

The slope of a consumer's indifference curve between two commodities represents

When the price of a commodity falls, we can expect

-In Figure 5-1 from the text, if the price of pizzas is $8: a.how many pizzas will the consumer purchase? B.what is the payment for the optimal number of pizzas? C. how much consumer's surplus will the consumer receive?

The law of diminishing marginal utility explains why

The law of diminishing marginal utility states that total utility will decrease at an increasing rate as additional units of a commodity are consumed.

-Figure 5-5 shows a consumer budget line for french fries and hamburgers. The price of an order of fries is $2. This implies that the price of a burger is

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Figure 5-4 In Figure 5-4, the rightward shift in budget lines from the one containing point A to the one containing point B